China Doubles Down on "Two New" Policy to Boost Consumption
Transcript of State Council Policy Briefing on Implementing the New Round of Large-Scale Equipment Renovation and Consumer Goods Trade-in Programs
On Jan.8, the Chinese State Council held a policy briefing session on implementing the “Two New” policy(两新政策, means large-scale equipment renovation and consumer goods trade-in). The policy aims to stimulate domestic demand, promote industrial upgrading, and advance green development by encouraging businesses to upgrade their equipment while incentivizing consumers to trade in their old products for new ones with direct state subsidies.
Participants include:
Zhao Chenxin, vice chairman of the National Development and Reform Commission (NDRC)
Liu Dechun, director general of the Department of Resource Conservation and Environmental Protection of the NDRC
Fu Jinling, Director General of the Department of Economic Construction of the Ministry of Finance
Li Gang, Director General of the Department of Market Operation and Consumption Promotion of the Ministry of Commerce
Peng Lifeng, director general of the Credit Market Department of the People's Bank of China
Liu Hongsheng, director general of the Standards Technical Management Department of the State Administration for Market Regulation
Some Highlights：
The outcome of such subsidies in 2024
After the enhanced “Two New” policy was launched in late July 2024, the national sales of household appliances and audio-visual equipment quickly turned from a 2.4% year-on-year decline in the previous month to a 3.4% year-on-year increase in August. This strong growth momentum continued, with significant year-on-year increases of 20.5%, 39.2%, and 22.2% in September, October, and November, respectively.
Expanding subsidies range with more money
When asked about the exact amount of subsidies pack, Zhao Chenxin, The Deputy Director of National Development and Reform Commission (NDRC) didn’t provide exact numbers but still promised a substantial increase.
可以肯定地告诉大家，今年超长期特别国债用于支持‘两新’的资金总规模比去年有大幅增加。
I can tell you with certainty that this year's total funding from ultra-long-term special government bonds to support the "Two New" policy has significantly increased compared to last year.
The reason is clear: the budget needs to be approved by the NPC first (or at the NPC's standing committee meeting). That’s why he said they will reveal the detailed number during this year’s Two Sessions.
For automobiles:
China IV emission standard vehicles that meet requirements are now eligible for scrapping and renewal subsidies
Subsidies are provided for vehicle trade-ins
A maximum subsidy of 15,000 yuan (about 2100 USD) per unit for purchasing new energy passenger vehicles
A maximum subsidy of 13,000（about 1820 USD） yuan per unit for purchasing traditional fuel passenger vehicles
For household appliances:
Four new categories have been added to the subsidy program: microwave ovens, water purifiers, dishwashers, and rice cookers
Total categories increased from 8 to 12 compared to last year
Consumer subsidy limit for air conditioners increased from 1 unit to 3 units
For digital products (new addition):
Includes smartphones, tablets, and smartwatches/bands
15% subsidy on retail price for products priced under 6,000 yuan (about 840 USD)
Consumers eligible for one subsidy per product category
A maximum subsidy of 500 yuan (about 70 USD) per item
PS:
Interesting to see that Chongqing officials are actively calling local cadres to consume to boost the economy. According to a video posted on Weibo, Rongchang District Party Secretary Gao Hongbo called on officials to buy new clothes and dine out, taking the lead in consumption, driving consumption, and guiding consumption.
"I hope that each comrade here will buy a new set of clothes before Spring Festival, buy a new set for their spouse, and buy a new set for their children. I hope you will take your family out for a meal every weekend. The average meal cost in Rongchang is 60-100 yuan per person. If 10,000 of us consume, that's 1 million yuan going to our individual businesses and small business owners in a week."
https://m.weibo.cn/detail/5120467685870264
Below is the full transcript
source:https://www.ndrc.gov.cn/fzggw/wld/zcx/lddt/202501/t20250108_1395588.html
Deputy Director of National Development and Reform Commission Zhao Chenxin: Good morning, reporters and friends! I'm pleased to join colleagues from related ministries for today's press conference. General Secretary Xi Jinping places great importance on the "Two New" initiative, emphasizing at the Central Economic Work Conference the need to increase ultra-long-term special treasury bonds and strengthen the implementation of "Two New" policies. The NDRC will work with local authorities to build on 2024's experiences for better implementation in 2025. Let me review the 2024 "Two New" implementation with four notable achievements.
First, consumer vitality increased significantly. In 2024, over 6.5 million vehicles were scrapped or replaced. New energy passenger vehicles maintained over 50% market penetration for 7 consecutive months since June, with domestic sales reaching 11 million units. After strengthening "Two New" policies in late July 2024, household appliance and audio-visual equipment sales reversed from a 2.4% decline to 3.4% growth in August, followed by significant increases of 20.5%, 39.2%, and 22.2% in September-November.
Second, investment growth improved markedly. The ultra-long-term special treasury bonds alone supported over 4,600 equipment renewal projects, updating over 2 million units in industrial, energy, power, and transportation sectors. We estimate total equipment updates exceeded 20 million units under the comprehensive "Two New" policies.
Third, industrial upgrading showed clear results. Equipment manufacturing value-added grew 7.6% year-on-year in November 2024, contributing nearly 50% to overall industrial growth. Shipbuilding, smart consumer devices, and lithium battery manufacturing grew by 20.1%, 10.7%, and 8.8% respectively.
Fourth, green transformation advanced notably. We issued 168 key standards for energy consumption and emissions. Over 11,000 new smart community recycling facilities were added, and Level-1 energy-efficient appliances reached 90% of sales. The policies achieved energy savings of 28 million tons of standard coal and reduced CO2 emissions by 73 million tons.
For 2025, we're expanding the program with increased funding, broader support, optimized implementation, and enhanced leverage effects. The expanded policy document has been approved by the State Council. Key points include:
First, strengthening equipment renewal. We'll continue supporting equipment updates in industries, energy use, power, transportation, logistics, environmental infrastructure, education, culture and tourism, healthcare, and old elevators. We're expanding subsidies to include electronics, safety production, and agricultural facilities. We'll allocate specific funds for equipment renewal loan interest subsidies to leverage funding and reduce financing costs. We'll increase subsidy standards for agricultural machinery replacement and new energy city buses and power batteries.
Second, expanding consumer goods trade-in programs. China-4 emission standard vehicles will now qualify for replacement subsidies, with standardized national maximum subsidy limits. Eligible home appliances for trade-in subsidies will increase from 8 to 12 categories in 2025, with up to 20% subsidy on sales price per item. Consumers can now receive subsidies for up to 3 air conditioners instead of just 1, and we're introducing subsidies for mobile phones and digital products. We'll continue supporting home furnishing and electric bicycle trade-ins.
Third, improving recycling and reuse. We'll continue supporting high-level recycling projects, regulate second-hand trading, and upgrade remanufacturing. Central government will maintain special funding for electronic waste recycling. We're accelerating the "reverse invoicing" system - an innovative policy allowing recycling companies to issue invoices to individuals, enabling VAT input tax deductions and reducing their tax burden. While implementing this innovation, we emphasize strengthened supervision and standardized tax practices. We'll also implement special programs to promote recycled materials use, supporting automotive and electronics manufacturers in increasing recycled material usage.
Fourth, leveraging standards enhancement. We'll upgrade standards for key industries, equipment, technology, energy consumption, and emissions to international levels. By end-2025, we aim to complete the revision of all 294 national standards in "Two New" areas. We'll strengthen standards enforcement and expand energy and water efficiency labeling, selecting efficiency "leaders" among products and equipment.
Regarding implementation mechanisms, we'll improve fund allocation based on 2024 performance. The 2024 distribution considered factors like resident population, GDP, and vehicle/appliance ownership. 2025 will add policy implementation effectiveness as a new factor, favoring regions with better 2024 performance. We'll optimize participation requirements, support all types of business entities equally, improve fund settlement efficiency, and reduce advance payment pressure. The subsidy application process will be streamlined to minimize repetitive information submission, ensuring benefits reach consumers more efficiently.
Q&A
Red Star News Reporter: The "Two New" initiatives, particularly the large-scale equipment renewal policy, have shown clear benefits for industrial upgrading and green transformation. Besides expanding scope and raising standards, what other comprehensive measures will be taken in 2025 to support society-wide equipment renewal further?
Liu Dechun:
Large-scale equipment renewal is crucial for our country's industrial transformation and high-quality green, low-carbon development. It benefits both current economic growth and medium to long-term foundation building. In 2025, building on 2024's positive results, we will further increase ultra-long-term special treasury bonds funding, strengthen support, enrich support methods, amplify leverage effects, and establish long-term mechanisms for large-scale equipment renewal.
First, expanding scope and raising standards. For expansion, we'll include three new sectors: electronic information, safety production, and agricultural facilities under special treasury bonds support. Beyond China-3 emission standards, we'll support the replacement of China-4 commercial trucks. For agricultural machinery, we'll add six new categories, including rice transplanting machines and field operation monitoring terminals. For standard raising, we'll increase subsidies for new energy city buses and power batteries from 60,000 to 80,000 yuan per vehicle and raise cotton harvester replacement subsidies by 20,000 yuan per unit.
Second, strengthening interest subsidies. In addition to the central government's 1.5% interest subsidy on qualifying equipment renewal loans, NDRC will arrange additional interest subsidies through special treasury bonds, amplifying funding leverage and reducing financing costs, especially for SMEs. Meanwhile, we'll improve the entire chain of loan subsidy implementation, from application to fund disbursement, making it easier for enterprises to access preferential policies.
Third, optimizing processes. We'll continue the "local review, national verification" approach for special treasury bond-supported projects, simplifying approval processes for better efficiency. We'll also encourage eligible regions to implement equipment renewal at scale through industrial parks and clusters, better motivating parks and SMEs.
Fourth, maximizing potential. We'll conduct equipment assessments against technical, energy consumption, emission, and safety standards, setting clear renewal targets by sector based on industrial restructuring and equipment elimination guidelines. We'll maintain both incentives and constraints, legally phase out outdated equipment, promote comprehensive renewal of existing equipment, expand effective investment, and increase advanced production capacity.
Reuters Reporter: Will special treasury bonds be issued earlier this year for "Two New" support? How much funding is allocated for consumer trade-ins?
Zhao Chenxin: As mentioned earlier, General Secretary Xi Jinping emphasized at the Central Economic Work Conference the need to increase ultra-long-term special treasury bonds and strengthen "Two New" policies implementation. Regarding funding, we've already allocated the first batch of consumer trade-in funds for New Year and Spring Festival consumption demands. This funding will ensure smooth policy implementation and adequate subsidies for holiday consumer demands.
As for the total funding scale for this year's "Two New" support, I can confirm it will significantly increase compared to last year. The specific amount will be announced during this year's "Two Sessions."
CMG Reporter: While the "Two New" policies achieved good results in 2024, we understand there are imbalances between different regions and sectors. Has the NDRC considered measures to improve policy and funding implementation across regions and sectors to ensure better results?
Zhao Chenxin:The nationwide implementation of large-scale equipment renewal and consumer goods trade-in programs, along with additional support from ultra-long-term special treasury bonds after July last year, was unprecedented. Over the past year, under the inter-ministerial coordination mechanism, all regions and departments have been actively exploring ways to achieve better results, continuously accumulating experience and addressing issues.
Regarding the regional and sectoral imbalances you mentioned, our stance is clear: we must identify these situations through the inter-ministerial coordination mechanism, analyze them promptly, and develop solutions to improve effectiveness. We won't overlook any issues and have prepared thoroughly with relevant regions and departments.
In policy design, we're focusing more on targeted solutions while maintaining the current overall framework. For example, regarding the simplification of subsidy applications, we've instructed local governments to utilize widely known government platforms and mobile applications, reducing redundant information submissions. To address businesses' advance payment pressure, we support local authorities in pre-allocating funds to payment platforms or operating entities to improve settlement efficiency. These examples demonstrate our targeted approach to each issue.
In implementation, we're emphasizing timeliness. We're conducting early policy training sessions, project planning, developing detailed implementation rules, and establishing information management platforms to ensure smooth policy continuation this year.
The NDRC will work with local authorities and departments to ensure thorough implementation while supporting local initiative and creativity. First, we're expediting fund allocation, having already distributed the first batch of consumer trade-in funds and initiated equipment renewal project applications. Second, we're strengthening supervision to ensure special treasury bonds are used properly for "Two New" initiatives and preventing misuse. We'll also crack down on illegal practices like false discounting and subsidy fraud. Third, we're improving policy communication and interpretation. We welcome media coverage and feedback about implementation challenges and public suggestions for optimization. We'll carefully consider each suggestion and work harder to implement the expanded "Two New" policies effectively.
Daily Economic News Reporter: Equipment and product replacement will result in large amounts of obsolete items. Without proper handling, this could lead to environmental pollution and resource waste. What arrangements have been made for recycling old appliances, consumer goods, and equipment in the 2025 "Two New" policy expansion? What additional measures will be taken to promote recycling?
Liu Dechun: Recycling is a crucial component of the "Two New" initiatives. Waste products have high recycling value - for example, a small scrapped car can yield over 30kg of rubber, 70kg of plastic, and 700kg of steel through precise dismantling. With deeper implementation of "Two New" policies, product retirement has accelerated significantly. In 2024, national vehicle recycling reached 8.46 million units, up 64% year-on-year. Moving forward, we'll focus on several areas:
First, we'll continue strengthening recycling capacity. Using ultra-long-term special treasury bonds, we'll support high-level recycling projects for scrap metal, waste machinery, and electronic equipment, fostering key enterprises in resource recycling. We'll support China Resource Recycling Group in establishing a national recycling platform and help supply and marketing cooperatives leverage their grassroots networks for standardized recycling.
Second, we'll develop second-hand trading and remanufacturing. We'll support platforms and third-party organizations in providing quality inspection and data erasure services for second-hand goods, particularly ensuring privacy and security in used mobile phone transactions. We'll support qualified used vehicle exports and encourage the remanufacturing of suitable equipment, expanding pilot measures for remanufactured product imports.
Third, we'll strengthen key waste recycling areas. We'll implement management measures for electronic waste treatment funds, continuing special funding for home appliance recycling in 2025. We'll develop plans for mobile phone recycling and promote trade-in programs for digital products. We'll support retired battery recycling to enhance resource security.
Fourth, we'll promote high-quality development in recycling. We'll accelerate the implementation of "reverse invoicing" for recycling companies, launch special programs to promote recycled materials use, and support automotive and electronics manufacturers in increasing recycled material usage. We'll strictly crack down on informal recycling operations and illegal dismantling of vehicles, batteries, and electronic products.